BROOKFIELD Corp /ON/

INVESTMENT PROPERTIES

Investment properties are recorded at fair value with changes recorded in net income. We present the investment properties based on our strategy to maintain an irreplaceable portfolio of premier properties in global gateway cities, maximize returns through a development or buy-fix-sell strategy, or recycle capital from the private funds of our Asset Management business.

The following table disaggregates investment property fair value changes within our Real Estate and Asset Management segments by asset type:

We discuss the key valuation inputs of our investment properties beginning on page 99.

Real Estate LP Investments

Valuation increases of $1.3 billion primarily relate to:

•higher valuations in our Australian senior living portfolio due to unit price uplifts and our U.S. logistics portfolio due to favourable market rent assumptions; and

•fair value uplifts in our Shanghai mixed use portfolio primarily due to higher occupancy rates; partially offset by

•discount and capitalization rate expansion at certain assets within our European office portfolio; and

•capitalization rate expansion and lower cash flows reflecting updated market assumptions at certain office and multifamily assets in the U.S.

In the prior year, valuation increases of $2.2 billion were primarily due to fair value uplifts in our U.S. logistics portfolio due to achievement of development milestones and higher markets, higher occupancy and cash flow assumptions from our Brazil office portfolio, and market price increases at our Australian senior living business. These increases were partially offset by discount and capitalization rate expansion to reflect market conditions at certain assets in Europe.

Core

Valuation decreases of $226 million were primarily related to higher cash flows in the retail portfolio, which were more than offset by lower cash flows at certain U.S. office assets as a result of updated leasing assumptions, and capitalization rate expansion at certain U.K. office and U.S. retail assets.

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Valuations increases of $75 million in the prior year were primarily due to higher cash flows from our retail assets reflecting higher rental growth assumptions for luxury retail tenants. These gains were partially offset by lower valuations across numbers U.S. offices due to discount rate increases and market assumptions.

Valuation decreases of $1.2 billion related to discount and capitalization rate expansion and lower rental growth assumptions at certain U.S. office assets, partially offset by valuation gains due to higher cash flows on certain assets in our U.S. retail portfolio.

Valuation decreases of $1.7 billion in the prior year related to unfavorable market rent and vacancy assumptions, and higher expected rent concessions based on leasing trends at our retail and office portfolios.

Other investment properties

Other valuation gains of $80 million were primarily due to the impact of decreased discount rates at our European hyperscale data center platform in our Infrastructure business.

Transaction Related Expenses, Net of Income

Transaction related expenses, net of income, totaled $608 million for the year. These relate to transaction and restructuring costs on acquisitions, net of dispositions, within our Private Equity and Infrastructure segments, and transaction costs associated with upfinancings across our businesses.

The prior year transaction related expenses, net of income, of $533 million was mostly due to transaction costs and restructuring changes within our Private Equity segment. The expenses also include certain legal and professional costs in our Corporate Activities segment related to the listing and special distribution of our asset management business.

Financial Contracts

Financial contracts include mark-to-market gains and losses related to foreign currency, interest rate and pricing exposures that are not designated as hedges.

Financial contracts drove a $337 million increase in fair value changes for the year, mostly attributable to gains on energy derivative and power contracts within our Renewable Power and Transition segment.

The decrease of $163 million in the prior year is mainly attributable to lower valuations on energy derivative and power contracts within our Renewable Power and Transition segment. The decrease also includes lower valuations of certain financial assets within our Corporate Activities segment.

Impairment and Provisions

Impairment and provisions expense of $1.3 billion in the year are primarily related to the impairment of goodwill at our healthcare services and asset impairment at our natural gas production, both within our Private Equity segment.

Other Fair Value Changes

Other fair value increases of $256 million for the year are primarily attributable to mark-to-market gains on our investment in a U.S. department store chain and at our Spanish solar energy business in our Renewable Power and Transition upon the step-up of our investment during the fourth quarter. These gains were partially offset by the disposition through a distribution in kind of our graphite electrode operation within our Private Equity group, as well as mark-to-market fair value changes on inventory at a natural gas storage asset in our Infrastructure group.